Introduction
Last Tuesday came the news that Sky and BT had been awarded the latest domestic rights to show live Premier League matches for three years from the 16-17 season onwards. The £5.14bn figure, which equated to another 70% increase in rights fees, was headline news and is summarised below. Sky will pay £4.176bn for 126 games which is an increase from the £2.3bn it paid at the last auction for 116 matches. BT has four more games (42 matches per season) than its current deal and will pay £960m over the three years of its deal. It previously paid £738m for 38 matches per season. In addition, the Premier League announced that the BBC had been successful in bidding for the iconic Saturday night UK Match of the Day highlights show for £204m.
Summary Premier League UK Live Rights Table
| Broadcaster | Total 16/17-18/19 amount paid (£) | Total Amount Per Season | Total Per Game (£) | Number of Matches | Percentage Increase on the Previous Deal | Number of Packages Won | Previous Amount Paid (£) |
| Sky | 4.176bn | 1.392bn | 11m | 126 | 83% | 5 | 2.3bn |
| BT | 960m | 320m | 7.6m | 42 | 18% | 2 | 738m |
It is worth bearing in mind that the £5bn+ figure solely relates to the Premier League's domestic market. In the previous tender, the global figure was rumoured to be around £5.5bn. With the domestic deal getting close to eclipsing that figure, and the global appeal of the Premier League continuing to grow, there may well be strong competition in a number of key markets including Asia and the US which may push the latest global price north of £8bn.
Context
Prior to the last auction, Sky was very much the leading broadcaster for live UK Premier League rights. It had previously seen off challenges from new entrants Setanta and ESPN and going in to the 13/14-15/16 auction cycle process, there were few (if any) whispers that BT would enter the market. The result of the auction surprised many with a 70% increase (to £3.1bn) on the previous £1.7bn 10/11-12/13 auction cycle that ESPN and Sky had won.
Historical Premier League UK Live Rights Table
| Year | 1992-1997 | 1997-2001 | 2001-2004 | 2004-2007 | 2007-2010 | 2010-2013 | 2013-2016 | 2016-2019 |
| Amount (£) | 191m | 670m | 1.2bn | 1.024bn | 1.706bn | 1.773bn | 3.018bn | 5.14bn |
| Total Cost per match (£) | 0.6m | 2.5m | 5.6m | 2.5m | 4.1m | 4.3m | 6.5m | 10.3m |
| Number of Games | 60 | 60 | 106 | 138 | 138 | 138 | 154 | 168 |
| Broadcaster(s) | Sky | Sky | Sky | Sky | Sky/Setanta | Sky/ESPN | Sky/BT | Sky/BT |
The degree of competition for the packages in the last two auctions has been significantly fiercer between two broadcasters with very deep pockets ramping up the price. In a number of ways, BT's purchase of live rights was seen by many analysts as a next step to get top premium content on its platforms and protect its own broadband offering. BT initially hoped that acquiring two packages would act as its own 'battering ram' to further its own cross-media, bundled internet offering. By retaining two packages, BT's UK focused football offering becomes stronger still with exclusive Champions League/Europa League matches from next season, FA and Premier League matches too.
Strategically, competition between BT and Sky for live Premier League matches has become a battleground for larger consumer offerings. With Sky entering the mobile market from next year and BT acquiring EE, live premium sports rights are seen as one of the core drivers for new bundled quad-play consumer offerings. Whereas at present, BT incentivises its customers to take its broadband offering through marketing its BT Sport channels for free, Sky conversely offers free broadband if consumers sign up to its premium TV channels. Both will therefore soon join Virgin and TalkTalk in being able to offer 'quad-play' packages for broadband, mobile, Pay-Tv and phone line rental services.
The Consequences for Sky
It was no doubt crucial for Sky to win the majority of the live UK Premier League rights. As can be seen from the table above, Sky has paid almost double its previous outlay to secure the five packages. It retained its prime Super Sunday and Monday night football slots as well as being the first broadcaster to screen a number of live, regular fixture Friday night matches too. It also has 26 first picks and 31 second picks of matches per season so it can show more of the best matches throughout the season. It would have been disastrous for Sky to have lost the majority of the live rights at a time when BT has won exclusive Champions League and Europa League rights at the expense of Sky and ITV. The question now will be whether Sky's consumers bear the cost burden by way of higher subscriptions due to their increased expenditure.
What it means for BT
BT has certainly consolidated its football broadcasting position. It pulled off a large coup by paying around three times (almost £900m) what ITV and Sky previously paid for UEFA Champions League and Europa League matches. That coupled with exclusive FA Cup and Premier League matches puts BT right at the heart of a comprehensive football offering which also includes Bundesliga, Serie A and Ligue 1 rights. At present, BT gives away its BT Sport channel to its own broadband subscribers and charges its non-broadband customers. BT's next presumed step will be a combination of charging its existing broadband customers to watch BT Sport and perhaps increasing the subscription charges further for non-broadband customers. Whilst BT Sport has around five million customers, it remains to be seen whether those that have the current 'free BT Sport with your broadband deal' will pay to watch the BT Sport channel that they previously received for free.
Virgin in the Mix
Prior to the auction announcement, Virgin Media who purchases Sky Sports and BT Sports on a wholesale basis from its rivals to sell on to its own retail customers had complained to Ofcom that the collective selling of live Premier League rights breached competition law. Such claims related to the number of Premier League matches made available being lower than in other European leagues, where more live matches are sold. Virgin argue that the exclusive provisions in the Premier League auction process significantly raise the price broadcasters have to pay and that as a result British subscribers pay too much money to access premium content as costs are passed on by way of higher prices. Virgin argue that they are priced out of the auction process and want for structural changes in the way the Premier League rights are sold and how the auction is carried out. Expect a preliminary view from Ofcom in March. With the auction now finalised it will be interesting to see what happens to the latest deal if Ofcom sides with Virgin.
A Windfall for the Clubs
As a result of the current 13/14-15/16 £5.5bn global auction, the amount that was centrally distributed to the 20 Premier League clubs significantly increased. This was predominantly because of the latest broadcasting deal. By way of example, in the last year of the previous £1.7bn television deal, Manchester United in the 12/13 season received £60.8m for winning the league. Such was the uplift that in the next season (13/14) Cardiff received more for finishing bottom (£62.1m) than United did for winning the league the year before. Indeed, although Liverpool finished second, they received £97.5m which was the highest ever centrally distributed amount. As such, for the teams in the Premier League come the 16/17 season, it is likely the winner of the Premier League could earn around £140m+ with the bottom club earning £90m+. Similarly, clubs that are relegated from the Premier League will benefit from larger parachute payments too.
Conclusion
The next steps in the Premier League broadcasting story are going to be as fascinating as ever. Two very large companies will likely continue to bid huge amounts for live Premier League matches as part of their overall strategic offering to consumers. With BT and Sky soon able to offer a comprehensive package of Pay-Tv, broadband, line rental and mobile/data services, such live rights, which were once a battering ram for satellite subscriptions, are now part of a core communications offering to entice quad-play consumers and protect core markets. With the Virgin complaint and Ofcom investigation into the auction process a live issue, there are a number of regulatory uncertainties for the Premier League and its member clubs to face in the coming months. Nonetheless, the focus at present is quite rightly on the monumental sum paid by BT and Sky for the live rights and the benefits that such a deal will have for clubs.
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